On Friday, October 4, the U.S. Bureau of Labor Statistics (BLS) will provide another update on the health of the labor market. The three things ZipRecruiter will be watching particularly closely are
- Whether service sector employment is really contracting, as this month’s ‘flash’ IHS Markit PMI indicated, and in which industries;
- Whether manufacturing and retail payrolls are falling in response to the new round of tariffs imposed on September 1; and
- Whether the prime-age women’s employment rate, which is now within 1 percentage point of its peak, enjoys a boost as children go back to school.
ZipRecruiter Predictions for the September 2019 Jobs Report
Based on recent employer and job seeker behavior on ZipRecruiter, here’s what we are expecting to see:
- 90,000 jobs added to payrolls (30% fewer than August’s total, and well below the year’s monthly average of 158K)
- Unemployment steady at 3.7%
- Average hourly wage growth steady at 3.1%
Three Things to Watch in the September 2019 Jobs Report
Service sector slowdown
- The preliminary IHS Markit ‘flash’ PMI for service sector employment fell to 49.1 in September, the lowest since December 2009. Numbers below 50 point to job losses.
- While service sector employment growth has been fairly stable throughout the economic expansion, with growth between 1.3% and 2.0% each of the past eight years, the recent services PMI report suggests that weakness in the production sector is spilling over into the service sector. We will be watching overall service sector health and monitoring key subsectors, like business and professional services, for signs of a slowdown.
The impact of the current trade tariffs on manufacturing and retail
- On September 1, new tariffs went into effect on a wide range of consumer goods imported from China. While the Trump Administration delayed some of the tariffs on clothing and shoe-related items to December 15, tariffs on other goods went into effect as scheduled.
- In the weeks since, U.S. manufacturers and retailers have received hefty tariff bills for things like packaging materials, screens, and other inputs imported from China, with many of the bills coming as a surprise.
- The tariffs threaten the profitability of certain product lines and are causing companies to readjust their plans and renegotiate contracts. The likely result is a pause in hiring in those two sectors.
Women’s employment and participation at the start of the school year
- The (seasonally unadjusted) employment rate for prime-age women (those aged 25 to 54) tends to rise by 1.2% each September as children go back to school. Registering 73.9% in August, the prime-age female employment-population ratio has surpassed its pre-recession level and is well on its way to reaching its 2000 peak of 74.9%.
- If more women than usual use the start of the school year as an opportunity to reenter the labor force, drawn by rising wages and increased availability of flexible and remote work, we could see a further boost to female employment.